ISET and the Asian Development Bank Co-organize a Seminar on Inequality and Inclusive Economic Growth

On Tuesday, March 29 ISET and the Asian Development Bank co-organized a seminar on Inclusive Economic Growth in Georgia. The event was part of a joint project of ISET and ADB, Good Jobs for Inclusive Growth, aimed at creating conditions to enable inclusive economic growth in developing countries. In addition to focusing on inequality in income and opportunities, the seminar examined the issue of social protection and development of institutions.

According to Michael Beenstock, the leader of ISET-PI's research team, Georgia was a much more equal society in 2015 compared to late 1990s. However, when we look at the spatial aspect of inequality, most improvement is related to greater equality within regions, not between them. Thus, the gap between Tbilisi and the rest of Georgia remains intact. Another positive finding is that Georgia continues to enjoy fairly high (though declining) income mobility - within the same year many people see their incomes go up and down in a very dramatic fashion, resulting in a more equitable distribution of income. The gender gap has also narrowed over time: the "premium" for changing (statistically, not surgically) one's gender from female to male (holding constant other observable characteristics such as age, education and experience) has come down over the last 15 years.

Another important finding is that the rapid real wage growth, which Georgia has experienced since late 1990s, has been primarily driven by capital accumulation (as well as negative demographics and out-migration, resulting in scarcity of high skill labor). Wage growth slowed down to 5%/year after 2008 because of the slowdown in investment after the August 2008 war with Russia, and the global financial crisis. Wages for low skill workers remained compressed due to the increase in unemployment (up to 17%) in 2008 – 2013. Of course, as far as Georgia's private sector employment is concerned, slower wage growth was a stimulating factor, bringing unemployment down to a more "natural” rate of 12%.